Is free checking on its way out?

I agree with the cell phone senario. Everybody is screaming manage your account better, or be more responsible, but the fact is you dont have to.

In this life time we are offered many convieniences and yes we will pay for them. I dont think people mind paying for a mistake (intentional or not)but I think the main problem is the EXCESSIVE fees. To be able to owe anyone $480 for a $7 overdraft should be illegal.

This new checking account where people pay a small flat fee to do what they want, when they want sounds like a better privalage of not being embarrased at the checkout line than $290 in fees not to be embarrased. So I say if it works for you then do it.

I personally dont monitor my cell minutes not because i cant but because I DONT WANT TO, so I dont mind the $99 a month flat fee for unlimited usuage. most people dont even keep track of thier kids..they pay someone else to..get it- if the shoe fits-then put the other one on..lol..

I think the checking account is kool for those that it works for. Funny thing is people are being more responsible using a product as such instead of paying rediculous bank fees that they may currently be paying. Sounds like a responsible move to me.

You have all lost sight of a very important point. A bank is a business. A business' sole purpose is to make money. A bank makes money through overdraft fees.

A checking account is a priviledge, not a right. It is your responsibility to maintain your balance and know how much money you can spend. The bank does not manage your account. They just house your funds.

I wish you would all stop whining and accept some responsibility for what you have done. If you spend money you don't have, pay the fee. If you don't like the way the bank charges fees, go bank somewhere else. Or better yet, use cash.

Yes, consumers should not be spending money they do not have in their account, but the guild would also goes to the bank who lets the consumer spend what they don't have.

sorry john knows not and denver doug, credit unions also charge overdraft fees. switching to a credit union won't save you money if you spend money you don't have. if you hate paying overdraft fees, balance your checkbook and spend accordingly.

People need to learn how to manage their money!!! dont spend money you don't have. it's fairly simple… After your first overdraft fee or fees, you should learn your lesson… There is no excuse for racking up hundreds of dollars in fees especially if you're are of the consequences… Overdrafting is stealing! You're borrowing money before asking!!! I work in a bank and I hate when people threaten to close their account b/c they spend more than what they have and get angry when they get fees for it… A bank does not profit from zero dollar accounts anyway and it is costly to operate a bank. Who pays the employees? Online banking and all the other services? Wake up people, the world doesn't revolve around you…..

Make the switch to a credit union and save REAL money. Like any purchase, shop around and find a product that best meets your needs. Take responsibility; apathy can be expensive.

One of the main reasons banks charge overdraft fees is b/c they are doing you are service. Otherwise you would be the person in line at the supermarket that couldn't pay for food b/c your card was denied. These people act like the bank is punishing them for overdrafting. They are trying to make sure your payments other places are made on time (for instance your $900 mortgage or rent payment) or that you aren't embarrassed at a restaurant for not having enough money to cover dinner.

SWITCH TO A CREDIT UNION!

Credit unions are not-for-profit entities who are focused only on their members and their deposited money. Whereas banks are for-profit corporations focused on maximizing returns for the shareholders, NOT THE DEPOSITORS!

I agree people should be more responsible, and banks will nickel and dime whenever they can, but people seem to be ignoring a fact. Your free checking account is not free to set up or service, for the bank. Setting up systems that allow you to do online bank is not free for the bank. The costs that everyone should be paying for the services they are getting, are being subsidized by charging larger fees to overdrafts, etc. So I don't think the argument "why should I have to pay for a service I'm receiving" has a whole lot of merit.

Have a permanent cushion of $200 or so in your checking account, beyond what your typical spending is for a month (yes, you have to budget so you know). Then you'll never overdraw or need to transfer from savings. Replenish if you dip into it. Geez, there's no reason to be overdrawing. Either cut spending or plan better.

One of the points of the article is that overdraft fees have subsidized free checking. So don't rage on about irresponsible people being subsidized by you. They are the ones paying our way. Now the gravy train may be stopping. Maybe you should be thinking about the next way to skim from the irresponsible.

Well there are some ways to keep your accounting to a minimum and thereby, hopefully track your account balance better so that you won't bounce checks. 2 things I do are pay cash as much as possible so that it doesn't become an accounting issue, I'm only limited by the cash in my wallet. Other expenses for say business purposes can be put on a credit card and as long as I pay within the grace period, I pay no interest. I write very few checks monthly this way and balancing my checking account is a breeze, I also keep a good cushion in the account.

I agree that people need to be more responsible, it seems as some people always have bad luck and a dark cloud follows them. The reality is that proper planning and thought can avoid the vast majority of problems. Banks are for profit companies and know the dumb mistakes people make and how very few learn from their mistakes.

B of A, among other banks is notorious for making money off the float, i.e. placing a hold on a check and not giving you access to your funds. This further exacerbates the problem of sloppy record keepers and those who drain their account balance regularly. Most checks can clear in 1 to 3 days and the bank has the funds. I do feel people need to own up for their actions but also the banks are scamming where they place a hold of a week on a certified check that they KNOW clears in 1 to 2 days while collecting junk fees during the period for which they've collected funds but not credited the account holder. This practice is plain wrong.

I am so sick of subsidizing people's irresponsibilities. I have 800+ credit score but my bank credit card has increased my interest from 2% to 15% all because this administration is forcing them to be nicer to the people making late payments and overdrafting.
Additionally, I have always trusted online banking until recently when I have noticed that the online banking does not update as frequently as it used to. If the debits and credits are not going through as fast, it could induce more people to overdraft. A pretty sneaky way for the banks to get more money. Overdraft fees should exist because people are taking emergency loans to pay for their purchases. Instead of eliminating the overdraft fees, banks should be forced to maintain an efficient computer system to help customers track their debits and credits. Beyond that, people would be responsible for their accounts. What a concept!

Let us follow the logic here and continue it to other thinks. Speeding tickets for one. Why should the ones speeding pay the fine. It targets only those who get a ticket. Right? Not all of us.
When opening a bank account, are not this things explained? Or do not get a check card if you can not balance a check book. I do feel for those who can not afford the fee's. But I think the solution is on the individual, not a mandate from the Goverment.

Just another small chapter in the Obama
World View (saving the irresponsible from themselves). Stay tuned and keep counting. You're going to pay for it.

I am thinking about closing my HSBC checking account. The online balance is always wrong. Recently it has been taking 5-7 business days for a debit to clear. It never took this long before.

This is based on the boilerplate story the banking industry has used for every effort to strengthen consumer protection. Essentially the argument the industry lobbyists have developed is that the banks are using the money they get from unfair practices to subsidize services to people who don't fall into the traps their business model is based on. The people who benefit from that are essentially their partners who get a very small part of the money they make but provide a political base for allowing them to continue in business.

The fact is that a $45 fee for a $50 payday loan is loan sharking. The fact that they spread some of that money around by providing free checking doesn't change that.

When I use my checking account DEBIT card for purchases I choose CREDIT at the register because the bank currently give me reward points. Correct me if I am wrong but VISA is charging the retailer 2.5-3% on the transaction and kicking a percentage of that amount back to my bank. Thus, my bank receives funds EVERYTIME I ring up a VISA purchase with my DEBIT card.

How much are the banks making off of this transaction activity? I assume that they are making hundresds per year off of my activity alone.

Shouldn't the consumer advocacy groups care more about the majority than the 5%? Instead of fighting overdraft charges (which will pass costs on to everyone), spend your time educating the 5% a bit more. If they are not willing to listen, let them keep paying.

To GP85,

Try living in a real state and you'll see most people do live paycheck to paycheck and that's still not enough to cover the cost of living.

You mention linking your savings to your checking and using your own money to protect you against overdrafting your account. The problem with that is the bank charges you to use your own money to cover your charges. They call it a transfer fee so you do not get overdraft charges. When you go to the bank and ask why you are being charged to use your own money they just talk to you liike your an idiot. "Well Mr. Customer it cost you 15 dollars to avoid 108.00 in overdraft fees." If you ask me that is ludacris. Why have a savings account with the bank just put it all in your checking and be done with it. Banks have more excuses then anyone out there. Oh poor me we are in the poor house is all you ever hear banks say. Then their profit reports show millions even billions. The poor bank I feel so sorry for them and their CEO's making a few million a year. What makes it worse is it is the people that are barely making it normally that get hit with these fees. So they can barely pay their bills now and then they have to figure a way to pay back the overdraft charges too now. I just can not imagine what is wrong with the economy these days. Seems to me the money is going to the banks. The banks make stupid desicions to loan out risky loans and then the little man pays for the mistakes. Corporate America isn't it great?

To Harriet Tubman:

Are you kidding me? Maybe teach the kids some personal responsibility in those 18 years prior to college. Hold them responsible for the fees, not the banks. If they flunk out, are you going to blame the college? Give me a break

Which is more logical:

charge a person for a service -

or live off of deceptive, manipulative and plainly immoral fines. why immoral? Because the bank already was aware you didn't have the money to cover the transaction – but put it through anyway.

An overdraft should NEVER occur from a debit card transaction.

Let's instead have a moral means of operating a business. Charge customers for the service they are receiving, not some bizarre system that only punishes the poor.

@ Harriet Tubman: How about you let your kids cover their own $300 worth of overdrafts, rather than enabling them to continue the trend?

@ Nick CO: You're part right. But let's say I have $1000 in my checking. That night, 2 $200 transactions, a $250 transaction, a $300 transaction, and my $980 mortgage come through. If banks cleared checks your way, that mortgage check would be bounced, because most banks won't take most customers to $980 in the negative. If the bank cleared the largest check first, yes, they make more fee income, but also 1) Your large (more important) items get paid, and 2) the bank can choose to return the smaller items piecemeal, and maybe pay 2-3 of the 5 above.

Really though, this issue is just another symptom of the real problem plaguing this country: No one wants to take accountability for their actions. People don't want to pay fees for overdrawing their accounts. Young students expect their parents to pay for their mistakes. The banks expect the government to lend them money because they did too many shady loans. No one says "It's my fault, and I accept the consequences." We're all quick to point out our innocence, and demand that others save us.

For all you “bankers” defending the banks, it’s time to smarten up. I am a personal banker at Wells Fargo bank, and I have to say that the bank absolutely manipulates the posting of transactions to maximize fees. Happens all the time. They wait until the end of the day, when all the transactions come in, they post the largest one first, and then charge OD’s for all the other ones. Whereas if they posted in the order that they come the customer would have maybe one OD. It’s rediculous. So yes, people need to be responsible with their finances but guess what, the bank has responsibilities too. They milk this cash cow for all it’s worth.

Posted By Nick CO: July 2, 2009 6:39 pm

typical.

Those who have money saved blame the poor -

I had a direct deposit due to go into my account.. it was delayed a day. I had made 3 purchases, each for a few dollars – they overdrafted.

The cost was $105 dollars. The fees are not only unreasonable, the are deliberate – since the purchases could have simply been denied.

Those who think it's a good practice to bill people for being broke instead of charging people for a service they are getting are arguing nonsense.

Check your bank accounts daily on-line and update your checking account ledger with any lost or forgotten charges. I also round all purchases up to the next dollar when notating in check book. The excess money quickly adds up and gives you a cushion in case you're over.

After reading many of the comments here, I cant help but remember the reason I stopped banking with US Bank. I would get an overdraft charge for pending transactions. Never mind that I just deposited 10x the amount I used at the store. If the pending amount dipped below the actual amount they charged. Oh, and their pending amount never includes deposits. So if you have $100 in the account, deposit $500 that hasnt "cleared" but charge $101 you get an overdraft fee even if the deposit clears before the charge is posted. These are the kinds of practices that need oversight.

I call shenanigans. These banks are crying "poverty" over a *reduction* (not totaal elimination) in the amount of fees they are allowed to collect from their customers? What about the profits they all make off of our deposits? Most checking accounts pay the customer no interest, so the bank in that case stands to make even more off of the deposit then they do in an interest-bearing savings account (off of which they still make a tidy sum.) These banks can go to hell if they think they are going to nickel-and-dime those of us who don't overdraft any more than they already are. Time to look into credit unions…

From Miles: "SO the question is should the 74% people who never pay overdraft fees because they treat their money responsibly be penalized so that the 5% that get into trouble, can continue with their irresponsible behavior?"

You've got it all backwards – all that irresponsible behavior pays for your free checking. You should thank them. I'd hardly call it a penalty if you start getting charged for a service provided by your bank. If you don't like it, take your business elsewhere. If you can't find free checking, it just means your free ride is over.

This is unbelievable. I thought our country was a democracy, but yet again we may possibly rule in favor of the minority. "74% of customers pay no overdraft fees at all." Why would we cater to the other 26% of the people who do pay fees? It is their own fault for not being responsible with their finances. People should have to pay for their mistakes. The first mistake they made was not having overdraft protection and the second is not keeping track of their bank account.

There are a lot of people that don't seem to understand the concept here. Overdrafting is something that has happened to many, many people, some due to intent, some negligence, and some just honest error. When it happened to me, it was negligence. I set up a bill to pay on a specific day after I was to be paid. Just happened I was looking at the wrong month on my calendar, and the bill went out a couple days before my check arrived.

This caused my account to overdraft by $23. The fees assessed by the bank? $280. One charge put my account over, and I was charged for 8 overdraft fees because the bank posts the largest items first to maximize their OD revenue. It had never happened before, so I called a service rep to ask what could be done. They were empowered to put 20% of the fees back into the account. So I still ended up paying $224 for a single overdraft.

Here's the other part. It was an online payment. The bank could have seen that the account didn't have enough and just denied the online payment.

Now, I made a mistake and overdrew my account. I have no problem paying a fee for having done that, but even for those that are taking the position that it is a short term loan, doesn't over 800% daily interest seem a bit outrageous to anyone?

Needless to say, my accounts are no longer with that bank.

Join one of many community-based not-for-profit credit unions, or

start one if you don't have one nearby!

simple as that!

When we first got our ATM card when we did not have enough money in it to cover it would decline the charge and that was it and we would look like an idiot at the check out counter. Not to say that happen alot. Once in awhile we were off in our calculating or forgot to log something when those ATMs first came out. That is the way it should have stayed. Then all of a sudden the ATM thing switched over and they never told us and we just got this large overdraft fees. And did we learn our lesson. I hate ATMs. I prefer my credit card because I don't have to keep up with the charges. Because with my husband and I both using it and if one charge slip gets lost then it can get your account off and then you can get into trouble. To me my checking account needs to stay for necessary expenses such as living and all other purchases I use my regular credit card for. Never had any trouble until that darn ATM came along. I don't believe in overdraft fees and I sure don't like the idea of my bank not letting me know that they were making that change in business regarding my ATM which cost me money. And I will say that they have continued to do business in the same way that got us in this mess now, especially WaMu. They are still making low interest loans to high risk customers (ie those with bankrupticies, and low credit scores, etc. when no other bank will pick them up) so I wonder how are we ever going to get out of this mess and when am I ever going to stop paying for their mistakes????

To Miles from Tucson,

You said, most people live paycheck to paycheck. I don't believe that is a true statement. Most people do try to keep their expenses lower than income. But it is true that there are enough people that feel entitled to spend and live beyond their means consistently. They are the ones that would be impacted. (Someone who goes over once in a couple of years will easily have the bank refund the OD fees – it is the perennial offenders who suffer).

SO the question is should the 74% people who never pay overdraft fees because they treat their money responsibly be penalized so that the 5% that get into trouble, can continue with their irresponsible behavior?

Also for a lot of people who do not have too much cushion but yet stay away from overdrafts by being disciplined, having fees on their accounts might simply result in them losing access to a bank account. They would then have to buy debit cards paying a fee of $3 to get a $75 debit card. What is good about that? Punish those who are responsible so that those who are not can get a free pass?

I have never overdrawn my account and I do not keep a register of my account. I simply don't spend every dime I make. For those who are less fortunate, I understand that sometimes checks are written and they need the old float they used to have to compensate from the time the bill is due and the time the next paycheck comes in, but I do think you should have to pay for that. What I don't think is fair is that one could swipe a debit card and it be accepted when there is not that much money. As the author suggested, what's wrong with being prompted that this transaction will result in an overdraft? Give the person the chance to cancel the transaction and be more responsible. If they proceed with the transaction then by all means charge them whatever you feel is necessary.

On another note, I recently was charged $75 on two separate credit cards as an "inactivity fee". No, not an annual fee but a fee because I had not charged anything on the account for 6 months. Needless to say, Chase and 5/3 Banks now have one less customer.

To those of you who hate fees, listen up: I have been using the same bank for years (since I was 16) and the only thing I have used them for is checking and savings.

I have never paid even one cent for anything. They offer free checks, and my balance is ususally so low I find it hard to believe they are making any interest off of my balances. I must write dozens of checks a month and they never make money on me.

Why do I get such great customer service from them? Without paying? Because of others that pay the fees.

It is a good thing that banks are charging these fees, becuase if they did away with all fees, they would have to get the money from somewhere else: normal folk like me who pay their bills on time.

The same can be said of credit cards. If we all paid what's due and when it was due, they wouldn't even be in business to loan us the money.

My wife and I have a joint checking account and have always tried to be very careful with our money. We overdrafted our account by $8 last month after an autopay bill went through early due to a weekend. So yes, mistakes can and do happen, especially if you keep a low balance in your fluid checking.

After we overdrafted we talked to our bank and they refunded the full OD fee because we had not overdrafted in the 5+ years we had been banking with them. My brother-in-law likewise had a fee refunded to him by another major bank after poor management one month, and he had an overdraft the prior year in his free checking account as well.

The point is, the OD fees are extremely high but in these and many other situations banks will work with you to minimize the damage a poor choice has on your finances. The overdraft fees are not vindictive but are intended to deter careless and lacksadasical spending. If you overdraft every week and treat your checking account as a line of credit then you deserve to pay the monstorous fees. Personal responsibility means nothing any more it seems. While I'm glad the bank refunded the fee I wouldn't be crying about it had they not as we carelessly went below our buffer balance, and we knew better. Y'all should too.

I wish I could undserstand why a bank (or fimancial institution) can accept a transaction when there is no money (or not enough of it), and then charge a big fee because there is not enough funds… If the bank ok the transaction, it should be THEIR problem. No money? no transaction! No need for a law.

I do think people overdrafting their accounts are being irresponsible but at the same time if they stopped then i would have to start paying fee's on my free account. 74% of their income for these is a huge number. You have to be kidding yourself to think they don't try and milk this all they can. The reason we are in all this mess with the economy is due to these bankers and some people here think the banks are here to help us by paying the checks and charging these fee's. One poster said it's an interest free loan. How is charging 40 bucks interest free? These banks have made some huge mistakes with all the bad loans they've given out, they've take tax payer money and they want the TAXPAYER to buy the toxic loans from them. Yet some of you believe these people wouldn't manipulate the rules to tack more fee's on to the accounts? I have no sympanthy for the banks.

Let me say I "was" the king of overdraft fees in my checking account and I learned a hard lesson. But then I switched banking from B of A to WaMu and my life got better. lol.

I am an Obama supporter, but for the life of me I do not see why he objects to having those who act irresponsibly shoulder the lion's share of fees. If people overdraw their accounts, they need to be held accountable, and charging them fees is one way to do that.

I remember paying monthly fees and transaction fees and per check charges. I also remember NOW accounts that revolutionized checking and got banks to compete more customers. It's a pity that 5% of the people are too stupid to keep track of their checking accounts and use their debit cards like it was Bill Gate's ATM card.

When I was a poor struggling college kid, I knew to the penny what I had in my account. I didn't write a check if I didn't have money in the account. Of course, back then, there was no such thing as overdrafts and overdraft fees, unless you had a savings account with money in it to cover the check.

I started working in banking in 1969. During the last episode of high inflation, I was part of the price raising committee — our task was to make a profit on all classes of accounts no matter how fast our costs were going up. [It was a game of catch up -- very difficult, too.]

OD and uncollected fees were an easy place to get more revenue — not to mention that the abnk was also protecting its brand by trying to run the check bouncers of our bank [our competitors' OD fees were lower -- and we liked it that way -- let the deadbeats bank over there.]

Much has changed over the years and now instant balance and transfer technology exists.

So, if the government decides to 'protect' consumers from themselves by regulating fees for bad behavior, the banks will respond by 1) raising other fees and 2) closing unprofitable accounts — and letting those people go to check cashing places and buy money orders at 3.50 per payment to handle their needs.

Btw, with interest rates so low, your collected balances in the bank are nearly worthless — ANNUAL earnings on $10,000 sitting there all the time is about $25 — which isn't enough to cover the costs of operating an active checking account — 'free' checking might soon be restricted to those who have $25,000 or more on deposit. [That's about $5 a month in revenue to the bank -- barely breakeven, I'd guess.]

I think paying a small monthly rate for a checking account with no overdraft or hidden fees sounds pretty cool. This is similar to cellular phone plans. Every once in a while I would go over my monthly minutes, this would end up costing me more than an unlimited talk time plan. I would much rather pay a monthly fee and know exactly what I am going to pay each month even if I miscalculate my minutes or checking account balance. So a checking account with one flat fee sounds like a great deal.

I switched from Wells Fargo years ago to a Federal Credit Union. I haven’t paid a fee in years. So, don’t tell me the big banks don’t do have processes that make it easier to get charged a fee. Here are two examples. Using an ATM card, not a VISA check card, if I did go over my checking account amount, Wells Fargo would let it go through and ding me $35. The FCU declines the transaction. I can then use a normal credit card for a lot less than $35. Online banking transfers from Savings. There is a federal rule preventing more than 6 transactions a month. Wells Fargo will let you make transaction 7+ and ding you $35 per transaction. The FCU will not let me make the transfer. I find it hard to believe that a law was passed to let a bank basically tax you for every transaction over 6 times and let the transaction go through. Oh yea, the FCU also always lets me know in big notices how many transactions I have left for the month. Wells Fargo never displayed that interesting bit of information.

Od protection is the key. Add a line of credit, a credit card, additional checking or savings and link account for protection to avoid fees. You also have online banking, atm's, registers, most banks now have mobile banking to check balances. No excuses to overdraft people. Fees are high but there are many ways to avoid them.
Yes I am a banker by the way.

It's really quite simple; keep up with how much money you have in your account and don't spend what you don't have. For the mathematically impaired, there is overdraft protection.

I have been in banking for 20 years and the consumer has to be responsible for themselves. If you dont like the overdraft fee dont write the check or use your card. Be responsible for your actions. If you dont like the rate on your credit card shop around, you will find plenty of banks or credit unions that will not change your rate. Pay your bill off every month and be responsible! The average person is pretty stupid when it comes to money I see it everyday! USE SOME COMMON SENSE

Paper checks? How very quaint.

In the EU, interbank wire transfers (Überweisungen in German speaking areas) have almost completely superceded paper checks. There are fees, but they are quite low. It is possible to execute wire transfers from and to US banks, but the fees are out of this world. That's probably why God created PayPay and its ilk. PayPal, BTW, is no bargain either compared to EU bank transfers.

To explain this in more generally understood terms: wire transfers are to checks what E-mail is to snail mail. If I never write another paper check again, it will be too soon.

So clear from these comments that some people "get it" and others never will. Bottom line: maybe there's a reason the people paying these fees are poor–because they don't take the time to balance their checking acct, and manage their money. I'm a "poor" grad student, and I'm not eating out, I'll tell you. Why? Because I can't afford it. Banks are a business, not a free service. Someone has to pay for that teller to process my transactions.
That being said, some bank regulation is necessary–to control unfair practices, like the subprime lending that got us into a mess. However, overdraft fees are hardly unfair! They are explained, and given in written form when you open an account, and beyond that, common sense. Obviously you can't spend money you don't have!

I usually keep more than enough money in my account and have never had an overdraft.
Considering I get almost 0% on my balance, I had better never see any fee of any kind. Otherwise, bye, bye.

I think the banks have made enough already if they knew what they were doing. They've gotten away for too long charging $35 overdrafts on a per item not per day basis. They're already using our effing money for their gain when they're not robbing us because they won't bother to spend the money in a simple system that balances your checking and savings account balance by automatically swapping money from one account to the other. The banks are the robbers and that's not O.K.

People don't remember the old days at a bank free checking is something relativaly new. In the old days you had a monthly service charge and a per check charge for checking. I guess we could go back to that.

I work for a bank that is getting rid of the free account next month. sucks, i liked the product personally.

I have worked for a relatively small bank for 10 years. I don't really feel sorry for people when the overdraft anymore. I have to agree with lost of the other bankers on here. Its the same people doing the same dumb things after you explain what will happen time and time again. If you kept a check register and keep it balanced you should be fine. Over the last ten years I have seen a lot of changes when I started working there if you became overdrawn to often we would close your account and report you to chexsystems for account abuse but know we offer Overdraft Privilege and you can over draw down to you limit as much as you want with a nice $21 fee come to us per item as long as you pay us back with in 30 days. But if a customer didn't overdraw they would have a problem.

Overdraft fees are trivial to avoid. Just keep a month's worth of expenses in reserve in your checking account and never buy any big ticket item without first checking your balance.

I've never balanced my checkbook and have also managed to never pay any sort of bank fee or interest charge. Everything gets paid by credit card or debit card and all my bills are paid automatically whether I bother to open them or not.

Also, sometimes the OD isn't created by the customer, but by a bad deposit. My mother in law had many battles with my father in law's alimony payments bouncing and causing her to have OD fees. So, while yes there are people who just don't watch and don't care, there are also people who are unfortunately victimized.

Well here's a new one. Our bank has a program where every swipe of our check card or every ATM transaction results in $1 being transferred to our savings account. The accounts are linked, so it serves as overdraft protection. Last month when I knew I was going to be short in my checking but had the funds in my savings, I went online and transferred the money proactively. The balance showed an available amount in my savings, so I transferred that amount. All SHOULD have been ok. Except the bank also transferred the needed $ amount from my savings later that day. The item posted to my checking, and the transfer I did showed as "processing" instead of happening instantly- which it should have- so the bank made an instant transfer. Then my transfer processed the next morning, leaving me with a negative balance in my savings account. I got hit with an overdraft fee in my savings account due to poor software and banking processes!

If you drink too much and end up in the front yard puking, is that your fault? If you overdraw your account is that your fault. In both cases, you didn't know your limits.

We'll see how all you people that are defending bank OD fees feel when you send your kids off to college with their brand spanking new checking account and they go out on the weekend and overspend. Bet you'll be singing a different tune when you have to cover your kids $300 in overdraft fees!

simple fix. Charge the fees based on dollar amount opposed to transactions monthly. Example $0-$100 $20 fine
$101-$200 $30 and so on

For all you "bankers" defending the banks, it's time to smarten up. I am a personal banker at Wells Fargo bank, and I have to say that the bank absolutely manipulates the posting of transactions to maximize fees. Happens all the time. They wait until the end of the day, when all the transactions come in, they post the largest one first, and then charge OD's for all the other ones. Whereas if they posted in the order that they come the customer would have maybe one OD. It's rediculous. So yes, people need to be responsible with their finances but guess what, the bank has responsibilities too. They milk this cash cow for all it's worth.

Here is the Key: If you can't afford to have a Baby, don't make a baby and don't make society pay. If you overdraw a check because you can't pay and the bank covers your check, they just made you a loan. You agreed to that when you signed paperwork at the bank or the bank disclosed it to you through the mail. If you can't or didn't read it, shame on you. So many people work two jobs to make it and are responsible because it's the right thing to do. If you are up at 3 in the morning buying crap off infomercials and can't afford it, shame on you. Tired of being a loser? Wake up! Step away from your PlayStation and take some responsibility! Wah..you messed up, take a step back and acknowledge that you are a loser if you bounced a check. Stop doing stupid things. Idiot air waster's.

I think what has started this rolling is the issue of fees and the various schedule fees that banks and credit card companies were charging people and how they were charging them. If there hadn't been the excessive running of certain fees and the quick switch of addendums by banks and credit card companies this wouldn't be an issue. However as financial instituitons started to reign in profits by cutting credit limits, raising fees and interest rates people got upset. Overdraft is just in the crossfire. Do i think it is a bit excessive, well when something becomes over 75 percent of your business I would say you are dependent on that stream of income. If you become complacent and only have that as your stream of income guess what when it goes you are toast. What if people started to watch their money and those fees evaporated banks would start clammoring for other ways to make up the lost revunue. I just think the goal has become way to focused on generating the highest profits possible instead of generating sustainable profits. Sustainable models should do several things grow the business, satisfy customer, reach new customers and generate a nice amount of payback to investors. You can't milk the cow dry because you're gonna end up with a ticked off cow and sour milk in the future. But if you develop a solid plan and implement it wisely you won't be super rich, but you will have a solid foundation which can withstand anything along with a solid customer base who will stand with you.

My comments on illegal actions regarding fees performed by Compass Bank has been deleted repeatedly in a move to keep people on here from hearing about it, and the current investigation that is ongoing….thank you CNN for not letting the people see the facts I have, good job

I love how some of you are talking on here like your bank is your best friend…..ummm, they dont care about you…only your money.
Please, like your bank really cares about you…

I am currently involved in a lawsuit with Compass Bank over the fact that they used an OD charge to drain my account to $.04 (with no prior draft pending), then cleared 2 checks that would've been covered by the amount in the bank, and it blatantly shows on my account statement, thereby generating 2 more OD fees.
I had spoken with 4 different "customer care" specialists who all gave me different answers as to why the initial fee was drafted in the first place. Since then the fee has been replaced but not the additional fees they stole from my account as well.
Any of you who sit here and act as if you are perfect, and that is exactly what some of you are saying; that you never make a mistake, I call BS. Everyone makes mistakes and maybe some of you feel to inferior to admit that you may have made a mistake, we all have met someone like you…perfect in every way.

Having worked in retail banking for eight year, I personally can account for the individuals who choose not to be responsible for their finances, then charge into the bank screaming and cursing because they were charged for spending money they didn't have. President Obama has got it wrong…the banks charging the fees are not the problem. The fact that he is spending tax revenue to comprise and enact a plan to remove the responsibility away from where it should be placed and instead hold teh banks liable is only exacerbating the problem concerning the banks, who not only make money on fees, but on the interest charged on their loans….which are funded by their deposits. In other words, if banks remove Free Checking, people are less likely to keep their money in the bank…you get the point. When are people going to start being responsible for their actions, instead of waiting for BIG government to bail them out??

I have worked in a bank for 15 years. I have the misfortune of having to deal with people who are overdrawn, requesting refunds, on a daily basis. For the most part, this is not a pleasant experience. I have seen first hand how consumers do not take responsibility for the actions. Now, there are some fees that banks charges, I think are a bit absurd, but the overdraft/uncollected fee is meant to be a deterrent. Think about it. The bank is LENDING you money on the hopes that you pay them back. No contracts, no approval process, just the swipe of your card, and the bank crosses its fingers! Now, where can you get a loan and NOT pay interest? There are times when the bank is at fault, or a company overcharges, etc…BUT if the bank makes the error, we refund all fees and send apology letters. If your account is charged twice, THAT company should reimburse you the fees! So, to Mike in Tuscon, you are incorrect. The bank does refund when it is their error and when it is another companies error, they are then responsible and for the most part, the banks will work with you. I do think the fees are a bit high, and will ALMOST always refund someone when the fee is higher than the charge itself, provided it is not the norm of that consumer. There are tons of abusers out there, and let me tell you, they overdraw their account, then scream at the bank, and blame everyone but themselves. There are more habitual overdraft offenders than you know. The reason they keep doing it, is because the bank approves their purchases! I say, stop approving ANY overdraft, and those who complain won't complain anymore until their mortgage is returned because they were short a dollar!

this board has lost focus on WHAT the article is about. like it or not, banks generate enormous amounts of money from these fools who overdraft. these fools will always continue to act the same, but because of new regulation, the banks will lose this income stream, and thus cut back on the free checking programs. this article is not about the idiots who generate these fees, but about the consequences of Big Brother protecting them.

I work for a big bank and to tell you the tuth thats is banking for you. Most banks make money on OD fees. I worked as a cust rep for about 1 1/2 and I did get those calls: I dint know how much money i had in my account or can you give me my OD back..As a Cust Reps there are guidelines on how much ODs you can refund…Yes I felt sorry for some customers but at the same they need to be responsible for their finances…People just dont know how to ask questions…As a cust you have the right not to let any POS go through if you dont have the funds..Peole need to just stop over spending..Why do you think we are in a house crisis? Which created a ripple effect…Just budget your money…

Get a life Phil!! Mistakes happen!

I work for a bank myself; I also end up in the negative about once/year, but I'm fully aware that it was MY FAULT!! (& they wont reverse mine). The majority of you complaining about fees are habitual offenders. The ones that only mess up once in awhile usually get them reversed anyways.1st off, overdrafting is basically stealing… would you take $ out of your mother's purse for BK, & when she finds out you just reply "don't be mad, I get paid in a few days." I hope not! But the banks don't prosecute you, they simply charge you a borrowing fee. Are OD fees ridiculously high? Of course… Did you learn at account opening what the fee would be if you OD? Of course… and by the way, you CAN Opt Out of your check card allowing you into the negative! But most people still won't do that, just in case.
Banks should just reverse ALL the fees the first time it happens, but if it happens again within 6 months, then take away your check card since you have absolutely no control of your hand sliding it through the machine at the store…
Otherwise, go get a shoebox. Put all your money in it. When the shoebox is getting low, cut down on the spending. If it gets empty, burn it!! It will feel good to you and you can stop blaming your ignorance on the banks!
Simple math!! $5 in account minus $8 at burger king is never more than zero!

I can see two sides to this issue. I personally beleive that anyone regardless of income can be responsible with their cash flow. It is a simple matter of attentiveness. Keep track of how much you spend and if you get close emptying your account, stop spending.

I DO NOT believe that the government should require banks to have authorization to overdraft someone's account. I DO believe that banks should clearly disclose this information to their customer as well as give them the option to turn this feature on or off.

Banks are banks and they will always be banks. We all know that our banks have made stupid and greedy decisions which have hurt us all; however, we have to look at what we get when banks do well. I used to have very high credit lines, which have been slashed drastically and as a well qualified customer, credit was easy to acquire. Getting credit these days is like pulling teeth even for the very well qualified. Control is good, but I think too much control can be very bad. Then again, they say too much of anything can be bad.

I have been hit a couple of times and it seems that OD fees come in eights. At 29.00 a whack it really adds up. Where I have caught my bank is where they post debits prior to deposits. They also pay the largest pending debt first – thus, you pay an extra 29.00 for that 2.50 coke and gum you bought 2 or 3 days before you made a mortgage payment. I can't believe the revenue figure 38.5B – hell yes, they should be asking permissions from the client and posting thier clients funds correctly. Soon to be my old bank – also likes to put holds on checks and cashiers checks – anything to attempt gaining more fees.

The people who overdraw their account by a dollar or so, are not the type of people this story is really concerned about. I work at a banking institution, and if someone really did overdraw their account by two cents or something like that, I suggest they have a seat and speak with someone about their account. Now as far as the people who sit there and consistantly write checks for their bills when they know they don't have the money in their account … those are the ones that the bank is really trying to penalize. Don't sit there and waste someone's time at the desk if you knew the transaction was going to overdraw you. Now I'll tell you the only overdraft rule that gets under my skin (which is why I change institutions of employment) is the Per-day overdraft fee if your account is overdrawn more than a day or two. Well, it takes 2-3 days for an overdraft notice to arrive in the mail … so the customer ends up getting hit with an od fee, and at least one per-day fee. That one bugged me. Also, CHANGE YOUR ADDRESS when you move. You won't know you're overdrawn if the mail is being returned.

As an employee of a bank, I've seen it all. People claiming tough times and over drafting at a liquor store or bar or 711 for that oh so necessary pack of cigarettes.

Set up over-draft protection, or use cash. If you're not responsible enough to keep track of your own money through all the avenues you can (online banking, text alerts, mobile banking, etc.)

A debit card is called a CHECK CARD for a reason. If you WRITE A CHECK without the funds available, it bounces and is returned for a fee or is covered by the bank for a fee.

There is no such thing as a free lunch; someone has to pay for it.

Everyone needs to stop putting blame on other people (or establishments) and take responsibility for their own actions.

First, all you 'bankers' out there need to put down your kool-aid and quit defending your industry. Your industry HAS transformed it's business model from a service provider to a fee collection agency. If you don't know that, then you must be younger than gen-Y, or senile.
I'd also like some of you 'bankers' to explain why many banks no longer process transactions in the order they occurred, but instead process them in the order that maximizes overdraft fees? Don't act like you don't know what I'm talking about. The fact is, banks have become criminal in their behavior, and a little regulation is in order. People are GIVING banks their money and should have an expectation that they will not be screwed out of all of it. And before you accuse me of being financially irresponsible for making this observation, take note that I own a business and my current bank account balance is 6 figures.
P.S. Overdraft fees aren't the only fees out there separating people from their money. The banks have found ways to maximize collection of any fee imaginable.

$19 a month to avoid $36 in OD charges in times when money has to be spent, when work is slow, or non-existent, isn't a bad deal for some. Indeed, many people budget tightly, work hard, and still have a hard time missing that precious few days until the next paycheck. And for no especially bad reason, they'll get hit by the banks accordingly. The fees they wind up paying could do much to build a savings to avoid them entirely.

It should be pointed out, these people typically pay their debts in the end anyway, penalties included, so they are being entirely accountable.

People like to kvetch about things that are none of their business and that they know precious little about. But what else is new.

I work at a large bank and although I don't always agree with our practices I have to say that the 5% deserve what they get mostly because it's the same 5% time and time again. I have bent our rules with many customers and at times been pretty forceful to explain to them that I can't continue to reverse fees for them but no matter how forceful I am they're back within a month asking for more reversals. Bankers are people too and for the average person we understand that "stuff" happens and even the best of us can overdraw, those are the people that usually take responsibility and don't call even though they're the ones we're most likely to work with.

Armand from Trumball – You are right on the money. This is a personal responsibility issue.

Miles from Tucson, if someone is living paycheck to paycheck, they need to take stock of their priorities and not spend $8 at BK when they only have $5 in their acct. I work for a large regional bank. If a client gets hit by an error from the bank, the bank will reverse the fee. If the client gets hit by an error outside the bank, unless they are habitually NSF, the bank will probably give them a courtesy refund.

The overdraft policies are absolutely correct and necessary. According to the article, 95% of the NSF fees are incurred by 5% of the account holders. They are getting unsecured loans from the bank. It would be wrong to make a systematic change to impact the 95% of customers that are responsible to try to save the other 5% a few bucks on their unsecured loans.

I would be okay with a client either accepting or denying access to overdraft ability when they open the account. That way, when they are looking to pay $8 at BK and only have $5 in the account, the cashier simply says – Sorry Mr. X, you don't have enough money in your account to eat here.

Some of you people must be perfect. Overdafts can occur for many reasons, and yes alot of them are irresponsiblity. Overdraft fees are fine, as long as they don't get outrageous. You do have to remember that banks are a for profit business but they do take things to extremes at times.
When atm cards were introduced, they were intended to save money by reducing staff at the banks. Now it is cheaper many times to go to a bank teller or write a check due to fees.
As far as only spending what you have, I like how you people pick on the little guys. Some of the most powerful people in America are overdrawn everyday. The U.S. government is overdrawn everyday, why do you think they are raising taxes? Tax increases simply mean the government spent more money than they had on hand.

Miles from Tuscon: you are wrong. Yes, you should be charged for an amount over your account balance because the money you have used to pay for the charge was not your money. Middle America living paycheck to paycheck is not the banks' probelm…it is your problem. Keep up with your finances! Become more frugal! You don't need to consume so much that your account is at the end of its value.

The uncollected funds bounce is not a scam…it is common sense. Why would you be able to use funds from a deposit that have not been collected by the bank into which they were deposited? That's like expecting to be full before you have eaten.

When does personal accountability come into play? Why do we not want to pay for our mistakes? If you don't have the 8 dollars to buy something at BK, then you should not be eating there. Why not spend, say, 4 dollars? or 3? Perhaps the bank should, instead of charge you, electrocute you for bouncing a check…maybe then we would care a bit more about our liberal spending. Children, please grow up.

I think a lot of you are missing the point here.. The overdraft policyies banks carry are quite ridiculous and I for one think they need to be looked at. Sometimes events beyond your control happen and you should not have to risk your livelihood on going $1 over on your account.

Let’s go with an example. Say you live paycheck to paycheck like most people and your account goes down below $100 every now and then and someone re-news a subscription automatically, overcharges you, ect. And you go over on your account. Well, once you go over, you could be hit with that $35 fee over and over and over before you even find out you are out of money. Since you get charged per transaction and businesses often run cards multiple times when they don’t work you could easily be hit with $500 worth of overdraft fees by the time you get to check your account.

This has never happened to me but I know of people who have had this happen and it just seems a little ridiculous. I for one would rather pay a few bucks for my account if it did away with this ridiculous overcharging

For those of you who have Over draft issues you need to read this. I have been screamed at by 10"s of thousands of people 5 days a week over the 4 years that I worked customer service for Checking/Savings accts for a big bank. I have had my fair share of days where I have left feeling bad for some of you that I could not reverse fees for but the best thing I can do is to make helpful suggestions. Firs off, if you have too many bills all due on different days of the month. Have all of your due dates moved so that all of your bills are due on the same day or they are split up and centered around your pay day. This way you will make all of your payments at once and it won't be so easy to over look one or two. If you want your deposit instantly available then it needs to be electronic, that means wire or direct deposit. If it's paper then it can be fake so expect a hold. Your current bank can explain the difference between a Credit/ Debit transaction and if you can't master the art then learn how to deal cash only. As far as the comments on tax payer money, The top nine banks were forced to accept it but look at the bright side, That tax payer money is going to get an 8% bank return during a recession ! ANY SUGGESTIONS ON WHERE TO GET A HIGHER RETURN RIGHT NOW ?

A Bank is a Business, not a charity. If you don't like the fees, don't overdraft you account!

How else can we make car payments and pay for vacations without occasional loans? (ie overdraft). If we could be approved for a loan, we would just do that, but since we cannot, then these overdraft fees are basically, interest on short term loans.

Everything that can be said defending a bank's policy to charge an overdraft fee has been said, except…

Overdraft fee's are like parking tickets; if you don't break the law, you won't have to worry about paying a fee. And just like a parking ticket, if you're 30 seconds over your paid metered time, you get slapped with a $60 fine.

Personal responsibility is the name of the game. If you're not up to it, then don't play.

I agree with Chris, Cedar Rapids IA: July 2, 2009 2:45 pm in that these fees are targeting the poor, but at the same time these people have got to get a clue. Maybe the right answer from the banks is to stop overdrafting altogether and deny the charge at the register. If I write a check at WalMart (or really if I see someone else do this, because who writes checks anymore) it is sent electronically at the POS. So, there really is no need for OD in the first place. You don't have the funds, you don't get the merchandise (or burger). . .

Wow, how simple minded. People are poor because they are irresponsible. I guess that made Jesus irresponsible.

I have never incurred an overdraft fee in more than twenty years. But I find it hard to believe that the technology does not exist to deny a debit request when there are insufficient funds in the account. If we’re really playing the fiscal responsibility card, the banks should just decline purchases when the account is maxed out. Truth is, it is more profitable for them to be fiscally irresponsible (complete the transaction) and then slap their own customers with a highly profitable fee.

The big problem is really that the banks have an unsustainable business model. They should be generating a profit from the services they provide (transaction fees). Instead, they depend for their profits on people screwing up and paying penalty fees. With that model, at least one of two things is guaranteed to happen: They milk the penalty fees so much that their customers feel like they’re being treated unfairly (resulting in regulation), or people get wise to it and they stop screwing up and avoid penalty fees. Either way the business model is fundamentally flawed.

There will always be banks out there not charging for ATM's etc… to gain customers. As for banks that are starting to charge for the right, they will learn that it is very easy for customers to switch. The business model not working is because banks have become very fat and need to slim down. They will do this by force since customers will indeed switch.

I think the people on here playing all high and mighty about "idiots" who have overdraft fees would be the same people calling all people on welfare lazy. I am guilty of overdraft fees in the past and now use a credit card for purchases and make sure I don't overspend. When I first started working I was living pay check to paycheck, and if my paycheck was late due to payroll issue, which was not my fault, if I used the debit card for numerous small purchases, I got slammed. Is it fair to charge a $175 fee for a few $2 purchases? Granted now making more money I avoid the issue, but beleive it or not the average reader of this article is probably in the top 10% of wage earners in America. Try to be a little more open minded.

Wah Freakin Wah.. As a Loan Officer I am Privy to some the most irresponsible stupidity among reasonably bright consumers. Got in trouble myself in my 20's. Figured it out and had Excellent Credit in 6 Months. Look at your Bank Statement every month.$1,000 in Fast Food Restaurants, Home Shopping Purchases? C'mon people don't blame the govt! Use your credit card for convenience and Points. Don't give them a Nickle of Interest! 29%!? The Mafia wouldn't charge that! America is no longer about Personal Responsibility. It's about…wah…govt I need help. American Express asks for Bailout money because they gave Millions of credit cards out to people without verifying income or Employment?! Shame on you. Goodbye we don't need you. Wake up lazy Americans. Pay your bills. Real Estate will come back and you won't be able to buy because your Credit is ruined.

I have had periods where I was hit with bank fees. It sucked but you know what? I accepted responsibility for my actions and payed the price. All you trying to protect the "poor" people need to get a clue. The reason they are poor and getting hit with fees if due to irresponsibility. This is no different than the whiners regarding credit card interest rates changing and credit limits being reduced. Who gives anyone the right to tell a private company, that is offering credit, what kind of fees they can charge? If you don't like the rules in your credit card agreement, or bank for that matter, then don't open the account.

The banks should learn something VERY OLD that works in Israel. ( Nobody understand how, but it does, they all got use to it )
The Banks charge for every transaction in the branch,Including a deposit of cash.
I asked once why for cash, the answer was " We do have to count this,Right? " that will $ 2.00 Please. Thank you !!

I couldn't agree more with Mark from Tinley Park, IL. If you are stupid and/or irresponsible enough to have 50 overdrafts a year and the bank charges you every time then I say "good riddance". I have absolutely no sympathy for someone who's too dumb to figure out that you shouldn't buy something WHEN YOU DON'T HAVE ENOUGH MONEY IN YOUR BANK ACCOUNT TO PAY FOR IT. What is our society coming to when we start basing our laws and regulations on the behaviors of the dumbest and most irresponsible members? Enough is enough. How about some personal accountability?

Also – here's a no fail personal finance tip: Use a credit card and pay off the balance every month. You will pay no interest, you will never be hit with an overdraft fee, and you will build your credit. And please, before you get the urge to, save me the sob story of being unable to control your every impulse to buy whatever you want and then paying huge amounts of interest. You have to be 18 to get a credit card, which means you're an adult. Act accordingly.

I used to work for a bank and I saw this all the time. What they are not telling you is that the 5% paying the repetitive overdraft fees are the people who can least afford it. Who are living paycheck to paycheck and do not have enough funds in a savings account or credit card to serve as overdraft protection. They hope the bank will go ahead and pay their mortgage or car note even if it means having to pay $32 per transaction.

Gee, take 500 bucks deposit it into your checking account and don't mark the deposit. That will ensure you never bounce. It's cheaper than 1500 bucks in fees. Or just link your account to your savings, you do have a savings account don't you ?????? If not and you are always overdrawing your checking then you are living beyond your means and need to address your spending habits….

I realize paying all of the fees can be expensive, but I have to agree with many of these comments. I work in a bank, and see day in and day out how often people pay these fees due to a complete lack of responsibility on their part. Banks offer many tools (checkbook registers, online banking, telephone banking, etc) to monitor balances. It also costs banks money to extend these mini lines of credit to customers which many people don't seem to care to take into account. Certainly there are extenuating circumstances and the rare instance where a refund could be in order, and often times the banks will oblige. But nothing gets me more annoyed than habitual over-drafters who expect to have money refunded or complain about the fees because they can't figure out how to balance their account.

Its not a 'Scam'. All complaints about fees & credit cards are just about three things LACK OF PERSONAL RESPONSIBILITY.

And deposits are never ever available when you deposit them, minimum 24 hours before you can touch those funds

And if you don't like the service your bank provides you are free to close your account and find one that allow you to spend money you do not have.

Good Luck finding one!!!

I think I must be the only person who takes out my check register and writes each purchase when I use my check card. I get weird looks and have to say "I am not writing a check." How else do you keep track and not over draw?

What happened to "if you only have $5 in your checking account" don't spend more than $5 or realize that you can't afford to eat out at Burger King?

The method they use is wrong and geared for the banks advantage. This is no different than photo enforcing speed limits on a road and putting 20 in a row. You get 20 tickets, which in all rights you deserve, but most likely after the first time you would have adjusted your speed because of the ticket. Without notice of the overdraft, you can get nailed my multiple transactions that you would not have done had you known. A daily fee sure, but a per transaction fee is insane.

What a dumb idea. Let's charge me a monthly fee so I can use my money. What is the point of keeping your money in a bank if you are going to be charged a monthly fee to keep your deposits safe to earn less than 1% interest per year. This hurts those who are actually responsible with their money. I guess those who are responsible with things are always going to have to take the heat for those who have no clue on how to manage money.

Those that waste thousands of dollars a year on fees deserve it. Maybe the fees should be higher.

I don't see anything wrong with the stupid of this country subsidizing my free checking account via idiot fees.

A. the 'bailout' was not free money. it is a loan.
B. since when did people think that banks were 'not for profit'?
C. writing a check that does not have the funds to back it up, is called check fraud. they deserve to pay fees.

I've been in banking for over 37 years and I am so sick of banks taking the brunt of criticism for persons who don't reconcile their accounts or think they are entitled to "no OD" fees. To process overdrafts it is for the most part a manual process which takes bank staff time to process whether it is one or numerous items. The simple fact is one of the reasons for the fee is to be a disincentive for those who can't add or subtract correctly in their check book. They have a choice keep money in the bank, link to another account or apply for overdraft protection to cover the checks they write. It is simple…the bank does not control the check writing or the use of the debit card…the account holder does. So instead of discussion how much banks receive in these fees, the author should be focusing on the large number of persons who do not take responsibility for their actions…which seems to be more the status quo in today's society.

The bigger scam is the uncollected funds bounce. You deposit a check into your account drawn on another bank down the street. You then mail a check to a third party using the money you just deposited. But the bank plays you by not clearing the check on the local bank before the check to the third party (in another state) hits and they charge you an overdraft fee. Is this fair? Why would it take longer for the bank to clear a local check than for the one you mailed to get to another state and then clear inter-state? The banks routinely do this to generate income.

If you think about it.. how do Banks stay in business.. not from Overdrafts, but from our deposits… when people overdraft there taking our hard earned money and spending it…

$1,500 a year on overdraft fees?? Are people really that dumb?? I can understand 1 or 2 overdraft fees but 'hundreds or thousands'

here is what works so you never are assessed another overdraft fee: CHECK REGISTER. Everytime you swipe your debit car or authorize a payment, subtract that money immediately. Do not rely on online or telephone balances.

And for those who run their checking accounts down to nearly the last dollar. Perhaps stop living above your means and forgo those $8.00 burger king lunches

For those who say it's just addition and subtraction…you are right. But I have to say…it's only human to err once in a while. Please stop acting perfect because you have money and be realistic. I havn't bounced a check in years but I'm wise enough to know how simple it is to make a mistake and how much it will cost you when you don't have a lot of money. That 5% of the population being hit with fees are probably our lowest income earners and the most vulenerable to bank predators. Stand up for your fellow American's…not the banks. Most of you reading CNN money probably have no clue because you don't read this stuff if you are poor.

Banks get all of this stimulus money, and somehow we're stuck with added fees and penalties for bank services? Is there something wrong with this picture? I'm sorry but everybody needs a checking account, and to throw out the free checking account model means cutting even deeper into the disposable income already dwindling out of America's pockets. This means slower recovery and, in turn, less profitability for banks.

I love this part:

"…alternative to those consumers who are tired of paying hundreds of dollars in overdraft fees each year…"

If those poor consumers are tired of paying overdraft fees, maybe they shouldn't spend more than they have in their account and learn how to balance their accounts. I'm 24 years old and have never bounced a check or paid even one cent in interest or fees for any bank account or credit card. It's called being responsible.

Why should banks have to get "permission" from customers before charging them overdraft fees? What customer will say, "Sure, charge me the fee, that's OK by me!" None!

I'm tired of irresponsible people making it harder on the rest of us responsible people. Obama doesn't see a problem with punishing responsible people and rewarding irresponsible people. It's ridiculous. Forgiveness of credit card debt, lower rates…all that means is higher fees for the rest of us! The companies will get their money one way or another. It's called revenue and it's called being a business. Without that interest and fees, credit companies would be hurting.

I say let irresponsible idiots have to keep paying fees. It's very easy not to pay fees and interest. No bank or credit card company makes it mandatory to spend more than you have or not make your payments in full. People do this to themselves. And thanks to them and Obama, the rest of us who pay on time year after year will end up paying maintenance fees and other stupid fees that we shouldn't have to.

On another note. I work for a leasing company. We are profitable and gaining marketshare in a poor economy. We are not doing it raising rates and collecting fees…we are doing it by picking up market share for offering services that others don't provide. ATM, free checking and such are all services these banks should be offering free if they want my business. It's ridiclious to think I let the bank have my money and they use it for profit but then they want to charge ME for that privilage? The bank makes money off my car loan, my mortgage ($35K in 4 years) and on my savings and checking balances. The fees are just greed pure and simple.

I work in the banking industry and the vast majority of people of consistantly overdraw their accounts do it simply by not tracking their spending. They don't write down the $40 their spent at the bar and then go out to eat and overdraw their account. It is not the banks job to track your money. TRACKING your money is your job. The job of the bank is to assist in processing of monetary transactions. If you commit to a service by using your account, then the bank must cover that purchase and the bank should charge you for doing that. It is easy to say call the bank to approve the overdraft…but soon those very people will complain about being "embarrassed" by having to call at all!!!

and somehow we are suposed to fill sorry for iresponsible people??? if you only have $8 in the bank you shouldn't eat out in the first place!

I agree with Mike from vermont. I remember when the business model of banks were to pocket the interest difference between what they paid you for your savings and what they charged you for your loans. With the Fed rates around 0% and the banks still charging 5-7% on most loans, that should be quite a nice bunddle. Why alienate the 95% of their customer who do not pay those fees and could switch to free online banking or to a Credit Union at will?

Addition and subtraction, that's all it is.

For those of you saying people should be able to avoid these charges…it only takes a simple miscalculation to ruin you especially if you live pay check to pay check like a lot of Americans are right now. Is $35 fee fair on a $5 check? Let me ask you this…if you were late on your car payment and the bank charged you 7 times the loan amount in a fee wouldn't you consider that to be unfair? Imagine a $70,000 fee on a $10,000 car loan. Also remember that check you bounced might have a bunch of $1 checks behind it that would have cleared but since the larger check went through first you get hit w/ $35 on each. So you can be off $5 on your account and ahve over $100 in overdraft fees. As a teen and someone in my early 20's I had a few fees because of my lack of experience. Now that I'm almost 30 and make tons more money I don't have a problem. These fees unfairly target the poor and young.

Overdraft fee's are for lack of a better word, deserved…. If you are going to be careless with your spending and not be responsible then thats what you get. The problem is people not the system! I never OD my bank account so why should I be charged a flat fee…Just another example of the gov wanting to unfairly treat responsibility while bailing out those who continualy don't learn their lesson.

@Al

Actually banks should be credited for preventing said illegal activity (if banks prevent the bounce then no crime is committed). They take responsibility away from whatever agency took the check, generating a loss for themselves if the overdraft isn't paid. Thanks for attempting to sound intelligent by trying to criminize banks.

I applaud banks for even allowing people to go negative in their accounts. I hope some day people realize that spending more money than you have (CC and overdrafting) is a LUXURY as well as a curse. It's not a bank's fault if you're an idiot, and they give you the benefit of the doubt if you just call them the majority of the time.

I can not agree more with Jim, Madison, WI: (July 2, 2009 12:44 pm) and Erin, Atlanta, GA: (July 2, 2009 12:56 pm). People need to take their financial responsibilities. Do not spend the money you do not have. Then there will be no overdraft fees, credit card debts or subprime mortgages. DO NOT MAKE YOUR POOR JUDGMENT TO CREATE A SOCIAL ISSUE AND ASK YOUR FELLOW CITIZENS TO BAIL YOU OUT!

I worked for Wells Fargo for 8 years (been gone for 6 years) and can say most of their ridiculous charges have been invented within the last 10 years. They used to let you add a credit card as overdraft protection for free, yet now you can still do it and instead of charging a $40 OD fee, you get charged $10 OD "Protection Fee", not to mention it is counted as a Cash Advance for the interest!

People who can't understand how to only spend money they actually have are worthless. I am tired of people putting the blame on the banks or someone else. I am 27 years old and have never bounced a check or paid 1 cent of interest on a credit card. I have even had checking account since I was 14 years old. I hope people who get charged with fees get screwed to the ground and get put on check systems and are never allowed to get an account again. That way we wouln't have to put up with their stupidity.

I really don't think it's fair to portray the "5% of customers who spend more than $1,500 each year on those fees" as victims of a broken system. The 95% of people who are avoiding the fees are doing so by being responsible and balancing their accounts and not spending money they don't have. The fact that bad decisions have consequences should influence those 5% of people who do not act responsibly to do so in the future. If I run a redlight, I get a ticket; if I leave my sunroof open during a rainstorm, my car gets wet; there is cause and effect, and people need to learn from their mistakes rather than complaining about the consequences.

My credit union offers a line of credit to cover overdrafts. You can choose how big your line of credit is as long as your credit score is worthy of a line of credit. Other than the incremental daily accruing interest charge, there is no up front fee to use the line of credit.

My guess is the folks who have this issue have poor credit and don't qualify.

I think if you don't have the money in your account, the purchase should be denied unless you call your bank to request an overdraft. That way you know exactly how much you will pay for the "convenience" of spending the bank's money.

If you don't have the money in your account…..DO NOT SPEND IT!!!! What is so difficult about understanding that. If you do overdraw an account and the bank pays the overdraft you are using the bank's money and have to pay for that. So I don't want to hear any crying about being overdrawn.

I bounced a check, ONCE.

Last time I checked bouncing a check was illegal. Isn't the bank aiding and abetting when they cover for you.

That's why i bank with USAA. Very conservative and did not need a bailout. My FREE checking will continue to be free with them.

I wish banks jack up the OD fee so I can keep my free services.

If irresponsible people use money that they do not have then they need pay the fees.

Government regulation to protect irresponsible behaviour is never a good thing.

Why rag on the banks?? If people spend more than what is in their account then perhaps the spending habits should be modified.
If you don't bounce checks you don't have fees.
If you don't have sufficient funds don't write checks.

Now the banks want to charge me to access my money??? Glad I dumped a major national bank and moved all my cash to a credit union. I encourage EVERYONE to do that same! Join a credit union and boycott those major banks who took our tax money and still want to steal from us some more.

I don't understand why banks don't make their money off of loans instead of penalties….imagine if your income depended on people screwing up…that's what the banks have done. It's disgusting.

If my bank were to start charging me fees for using them, I'd stop using them. I am THEIR customer. I LET them hold my money so they can use it to make money. Don't screw with me.

ING Direct offers a similar feature on their Electric Orange Checking account. First, you get an allowed overdraft amount up to $250. But, instead of paying a monthly fee all they do is acess interest (maybe 10-15% APR) on the negative balance based on the number of days your in the red. So, if I dipped into the red by $100 for three days during a month I would be acessed $0.04/day for a total of $0.12 (assuming 15% APR).

Paying $20 a month for the privilege of running a personal deficit of up to $500. Wow, people are stupid. I guess they learn from their government (ie, their parental figure).

Did any of the above posters check into the on going issues with major banks before making these comments? Banks have been, and are using advanced software to trigger NSF issues. When you able to affect which transactions (deposits, debits)happen first, to your benefit, then it's not a level playing field.
Many of the leading banks that have appeared in front of Congressional Hearings for the past year have been confronted with these exact issues. The report above stated In fact, a 2008 FDIC study concludes that 74% of all service charges on deposit accounts come from overdraft and insufficient fund fees , so tell me that this isn't rigged at minimum, and at worst violating the RICO Act.

So it sounds like this is going to end up hurting the responsible banking customers, just like credit cards jacking up rates even if you have no late payments to pay for those who are defaulting.

But Honey, I can't be overdrawn – I've still got checks left!

Maybe banks should start giving away check registers when you open an account. Ol wait they already do that.

So, you pay $240 per year to have an extra $500 (max) in overdraft protection. Wouldn't America be in a better spot if people just thought for a second and actually saved an extra $240 to put in their checking account and avoid needing the overdraft all together?

I find it almost humorous that consumer protection groups complain about overdraft fees. Consumers who still use large consumer banks deserve to pay whatever they get charged. There are plenty of other options available, such as credit unions and community banks, who large far less in fees and over the same robust package of products while offering exceptional service. Also, customers who get charged overdraft fees do so because a) they are trying to spend money they don't have or b) they are unaware of how much they actually have in their accounts. Both reasons are inexcusable. People need to take some responsibility or deal with the costs of associated with the alternative.